Massive Restructuring by Microsoft, Meta, and Others
Rapid Shift Toward Practical AI Agents Replacing Human Roles
“No More Entry-Level” as Inverted Pyramid Organizations Rise

Major tech companies like Microsoft and Meta have initiated large-scale layoffs, with Microsoft cutting approximately 6,000 employees—about 3% of its workforce—and Meta reducing its staff by 5%, including significant cuts in its virtual reality division. These actions reflect a broader trend of restructuring within the industry.

The ‘Foreseen Shock’ Becomes Reality

According to a report released on the 28th (local time) by U.S. venture capital firm SignalFire, the number of university graduates hired by 15 major U.S. big tech companies fell by around 25% year-over-year in 2023. During the same period, entry-level hiring at startups also declined by approximately 11%. In contrast, demand for mid-level professionals with 2 to 5 years of experience increased by 27% at big tech firms and 14% at startups.

SignalFire attributes this structural shift in hiring to the advancement of AI technologies, citing the example of Anthropic, widely seen as a rival to OpenAI. At its developer event, Code with Claude in San Francisco on the 22nd, Anthropic unveiled its new model, Opus 4, which can perform complex tasks such as coding, planning, and data analysis for up to seven hours without user input. CEO Dario Amodei declared, “Within six months, AI will be writing 90% of all code.”

Hard data are increasingly confirming these forecasts. According to the U.S. Bureau of Labor Statistics (BLS), employment for computer programmers has fallen by 27.5% over the past two years, while job postings for related roles have declined by 35%. The World Economic Forum (WEF), in its Future of Jobs 2025 report released last month, stated that 40% of employers are planning to reduce headcount in roles that AI can automate. SignalFire’s HR partner Heather Doshay noted, “AI won’t take your job directly—but someone who knows how to use AI better than you will.”

This trend is already evident in South Korea, where many startups and mid-sized IT firms are downsizing their development departments or outsourcing those functions to external platforms. This indicates a deeper shift in corporate mindset—AI is being recognized not just as a tool, but as a primary force of production. As a result, the once-popular advice that “learning to code guarantees employment” is rapidly losing its validity in the job market.

Proficiency in AI Becomes the New Hiring Standard

These changes are fundamentally altering how organizations approach talent development. In particular, entry-level roles in software development are no longer a default entry point. Companies increasingly prefer skilled professionals who are adept with AI tools or cross-functional team players, rather than junior developers with little experience. Most job openings are now geared toward experienced candidates, and only those with fully internalized, specialized tech stacks are considered viable. The idea that one can grow into a role through on-the-job training is quickly becoming outdated.

Even leading big tech firms that are driving AI innovation are now trimming their workforce, accelerating human replacement. On May 13, Microsoft announced layoffs affecting about 6,000 employees—roughly 3% of its global workforce—including subsidiaries and international branches. This marks the largest wave of layoffs since it cut about 10,000 employees in 2023. Microsoft described the cuts as a company-wide reorganization across all levels, departments, and regions, aimed at adapting to market shifts.

Meta, which has expanded aggressively into the AI space, has also pursued staff reductions. After laying off 5% of its workforce (about 3,600 people) in February, the company cut several hundred more in its virtual reality division in April. Earlier this year, CEO Mark Zuckerberg stated that Meta would raise performance standards and “let go of underperformers more quickly.” These moves underscore a critical reality: even existing jobs are no longer secure, as organizational structures evolve under the pressure of AI and automation.

The Disbanding of In-House Development Teams Has Already Begun

In the IT industry, what was once a theoretical concern—that AI would reduce jobs—has now evolved into a more profound reality. Observers note that the conversation has moved beyond mere headcount reductions and is now centered on the complete redesign of hiring and organizational structures. Increasingly, companies are shifting from scaling down recruitment to overhauling the entire talent system itself. In this new landscape, OpenAI’s Codex handles development, Google’s AlphaEvolve manages testing, Microsoft’s Discovery leads research, and outsourcing fills the remaining functions. The result is a growing transition toward organizational models that no longer require people in traditional roles.

This transformation is bringing fundamental change to the job market. Historically, employment demand within companies has fluctuated in tandem with economic cycles. Today, however, we are witnessing the outright disappearance of certain roles. For example, junior planners without hands-on experience, data entry workers, and basic QA testers are rapidly vanishing from hiring pipelines due to the rise of AI and automation tools. Companies are no longer seeking candidates for these positions, and the corresponding talent pools are becoming less relevant.

The deeper concern is that the collapse of the entry-level job market could have long-term consequences for workforce planning across society. Even if AI can handle tasks today, there is no clear strategy for developing experienced talent five to ten years down the line. Without a pipeline of junior employees gaining experience now, future organizations may face severe skill shortages. One IT industry insider warned, “Most companies today are focused solely on short-term efficiency and cost reduction,” adding, “This strategy will inevitably lead to talent gaps in the not-so-distant future.”

U.S. – Trump Strongly Criticizes Putin: "He's Killing Many People"
UK, France, and Other European Leaders Also Press Russia to Agree to a Ceasefire
Germany Signals Expanded Military Support for Ukraine if Ceasefire is Rejected

The war in Ukraine, now entering a protracted and devastating phase, is drawing intensified international attention—and intervention. Amid surging violence, including Russia's most expansive airstrike since the beginning of the conflict, two major geopolitical forces have aligned more visibly than ever before: the United States under President Donald Trump and Europe’s leading powers. From strong public denunciations to joint press appearances and threats of sanctions and military escalation, these actors are converging to exert concerted pressure on Russian President Vladimir Putin. Their goal is clear—halt the war, impose a ceasefire, and force Russia to the negotiating table, or prepare for a sweeping increase in Western response.

In a rare moment of unified front, Trump and top European leaders are combining moral condemnation, diplomatic posturing, and security guarantees in a bid to alter the trajectory of the war. Their voices are growing louder, and their tone more urgent, as Ukrainian civilians bear the brunt of the continued assault. For Putin, this new phase of the conflict marks an escalation not only in military terms—but in the scope and scale of global resistance.

Trump Turns Up the Heat on Putin After Largest Airstrike Yet

President Donald Trump, often known for his ambivalent tone toward Putin in the past, has adopted a markedly sharper position as Russia intensifies its military campaign in Ukraine. Following the massive overnight air raid on May 25—an attack involving dozens of drones and cruise missiles that blanketed cities across Ukraine—Trump issued a blistering criticism of the Russian president.

Speaking to reporters in New Jersey during the Memorial Day weekend, Trump said, “I’ve known President Putin for a long time, but he seems like a completely different person now.” He continued, “I don’t know what he’s gotten himself into, but he’s killing a lot of people.” Later, through a post on Truth Social, he wrote, “Putin is launching missiles and drones at Ukraine for no reason. He’s always said he wants the whole of Ukraine, and now that’s turning out to be true.”

Trump’s remarks came in the immediate aftermath of what observers described as Russia’s most extensive aerial assault since the war began—an act that appeared designed to show strength amid growing external pressure. The timing also complicated Trump’s recurring claim that he could end the war “within 24 hours” of returning to office. That assertion, long criticized as unrealistic, now faced renewed scrutiny in the wake of Russia’s escalated aggression.

Russia responded quickly and predictably. Kremlin spokesperson Dmitry Peskov dismissed Trump’s statement as emotionally driven, characterizing the moment as “sensitive” and warning against overreactions. Nevertheless, Trump’s tone shift did not go unnoticed in Europe. French President Emmanuel Macron, long critical of Russian aggression, suggested that Trump had come to a long-overdue realization. “It seems President Trump has finally realized that Putin’s claim to want peace was a lie,” Macron said. “It makes no sense to claim you want negotiations while simultaneously launching airstrikes.”

Europe Speaks with One Voice: Ceasefire or Consequences

While Trump delivered his rebuke from the U.S., European leaders gathered in Kyiv for a powerful joint show of support for Ukraine—and a unified challenge to the Kremlin. On May 10, in a striking moment of solidarity, UK Prime Minister Keir Starmer, French President Emmanuel Macron, German Chancellor Friedrich Merz, and Polish Prime Minister Donald Tusk stood beside Ukrainian President Volodymyr Zelensky to issue a coordinated demand for peace.

From the Ukrainian capital, the leaders called on Russia to accept an unconditional 30-day ceasefire covering all battlefields—land, sea, and air—beginning on May 12. Starmer was unequivocal: “Five countries, including Ukraine, have agreed that an unconditional ceasefire is necessary. All of us here stand with the United States in condemning President Putin.”

Macron reinforced the message with strategic clarity, pledging that European nations would collaborate with Washington to monitor and enforce the ceasefire, should Russia agree. “This ceasefire will open the path to immediate negotiations aimed at building a strong and lasting peace,” he added.

The joint message was more than symbolic. The leaders issued a stern warning: if Russia rejected the proposal, Ukraine would receive a dramatic increase in military support, and the West would implement tougher sanctions, especially targeting Russia’s energy and financial sectors. This marked a significant hardening of the European stance—once cautious, now unmistakably assertive.

Predictably, Russia pushed back. Peskov again took to the press, casting doubt on Europe’s intentions. He accused Western leaders of issuing contradictory statements and claimed their posture was “confrontational rather than conciliatory.” Despite this, the collective front of Western democracies signaled a shift in strategy—from reactive defense to proactive pressure.

Germany Hints at Lifting Limits on Long-Range Strikes

While diplomatic initiatives are intensifying, Europe is also accelerating its military commitment to Ukraine. The clearest sign came on May 26, when German Chancellor Friedrich Merz declared that there would no longer be range restrictions on weapons supplied to Ukraine—not just from Germany, but also from allies like the UK, France, and the United States.

Speaking at the Europa Forum in Berlin, Merz said, “The weapons provided to Ukraine are no longer subject to any range limitations.” The implication was bold: Ukraine could now use Western-supplied arms to strike military targets inside Russian territory. Merz elaborated further, saying this new approach ensures Ukraine has the means “to defend itself by attacking military installations within Russia.”

Later that day, Merz echoed the commitment on his official X (formerly Twitter) account. “We will continue to do everything we can to support Ukraine,” he wrote, adding that the removal of range limits reflects a policy shift in how Europe views the balance of power.

However, questions remain. One key uncertainty revolves around whether Germany will greenlight the delivery of Taurus long-range cruise missiles, which had previously been withheld due to fears of provoking Moscow. While Merz did not confirm this explicitly, speculation surged.

Reactions within German politics were mixed. Agnieszka Brugger, deputy leader of the Green Party and a prominent member of the ruling coalition, welcomed Merz’s statement, calling it “logical and long overdue.” But others expressed anxiety. Members of the Social Democratic Party (SPD) and the Left Party voiced concern about the risk of escalation. SPD lawmaker Ralf Stegner issued a stark warning: “Any step that escalates the war is a mistake.”

Nonetheless, the message was clear: Europe’s largest economy is signaling a new era of uncompromising military support, not just in rhetoric but in strategy. With airstrikes expanding and ceasefire talks teetering on rejection, the battlefield may soon be reshaped—not just by bombs and drones, but by a transformed global alliance against Putin's ambitions.

World’s No. 1 in Silicon Carbide (SiC) Semiconductor Wafers
Doubts Raised Over Survival Amid EV Market Gap and Intensifying Competition
Increased Possibility of China Absorbing Wolfspeed’s Assets and Technology

Wolfspeed, a U.S.-based silicon carbide (SiC) semiconductor manufacturer, is reportedly preparing to file for bankruptcy. The company faces mounting debt issues amid intensified competition with Chinese firms and tariff uncertainties within the U.S. As a key supplier in the power semiconductor supply chain, Wolfspeed’s downfall would inevitably lead to a restructuring of the global supply chain.

Bankruptcy Threat Due to Deadlocked Debt Restructuring

According to sources in the power semiconductor industry on the 28th, Wolfspeed stated in a report submitted earlier this month to the U.S. Securities and Exchange Commission (SEC) that "there are significant doubts about the company’s ability to continue operating." This acknowledges the difficulty the company faces in overcoming its financial troubles on its own.

Founded in 1987 in North Carolina, Wolfspeed leads the market by producing wafers (semiconductor substrates) using SiC, which is more resistant to high temperatures and voltages than conventional silicon (Si). SiC wafers are essential materials used in power semiconductors for electric vehicles, where energy efficiency is crucial, as well as in renewable energy.

Wolfspeed made proactive investments in power semiconductor manufacturing facilities during the early 2020s when the market outlook was optimistic. In December 2019, it invested USD 1.2 billion to build the Mohawk Valley fab in New York, and in 2022 announced plans for a USD 5 billion JP (John Palmour) fab in North Carolina. The Mohawk Valley fab is the world’s first fully automated next-generation 200mm (8-inch) power semiconductor plant, and the JP fab is the world’s largest 200mm SiC wafer production facility. Wolfspeed’s initial goal was to build a vertically integrated production system for SiC semiconductors.

Competition with Chinese Firms and EV Market Slowdown

However, as demand for electric vehicles slowed and the power semiconductor market stagnated, Wolfspeed, which invested heavily, faced the crisis first. Recently, automakers have been cautious about transitioning to high-voltage electric vehicle systems, as EV sales have underperformed expectations, delaying the procurement of next-generation parts. Consequently, Wolfspeed’s financial situation deteriorated rapidly. The company had regarded a USD 750 million subsidy promised under the Biden administration’s CHIPs Act as a lifeline, but this funding became uncertain after the start of the Trump administration’s second term, leading to a liquidity crisis.

Competition with Chinese manufacturers further pressured Wolfspeed. China aggressively pursued localization of SiC materials and wafers through technological development and production line investments. As a result, Chinese SiC manufacturers now threaten established players with low prices and fast delivery. According to market research firm Yole Development, as of last year, Chinese companies ranked 2nd (Tankeblue), 4th (SICC), and 6th (semiSiC) in global SiC wafer sales.

These companies had relatively low rankings in 2022 but saw rapid revenue growth within a year. Notably, SICC’s sales surged 804%, achieving significant progress in both technology and market presence. Chinese firms currently supply SiC wafers to global top power semiconductor companies such as the German firm Infineon. Meanwhile, the technology gap once led by Wolfspeed has narrowed, worsening its profitability.

SK Siltron Starts Sale Process

The situation is similar in South Korea. SK Siltron, which had also made significant investments in SiC and garnered attention, is now facing financial difficulties and is being considered for sale by the SK Group. This month, domestic and foreign private equity firms, including Hahn & Company, IMM Private Equity, STIC Investment, and Bain Capital, reportedly received investment memoranda (IMs) and completed due diligence and internal reviews.

SK Siltron is the only domestic wafer producer in South Korea and ranks 3rd globally in market share for 12-inch wafers. In 2017, SK acquired a 51% stake in LG Siltron from LG Group, along with 19.6% from financial investors, for around USD 575.6 million. The remaining 29.4% was acquired by SK Group chairman Chey Tae-won. As of September last year, SK Siltron’s debt ratio stood at 165.8%. This increase reflects investment burdens such as the new Gumi factory. Generally, a debt ratio below 100% is considered financially healthy, while above 150-200% signals financial risk.

Amid this, some analysts suggest that the crises facing global power semiconductor companies in Korea and the U.S. could become a stepping stone for China’s SiC industry. If bankruptcy or sales are finalized, the core patents, SiC manufacturing technology, and R&D personnel from these companies could enter the market. A semiconductor industry insider said, “For Chinese firms, which receive strong government support, this could be a golden opportunity for a technological ‘quantum jump.’ If they acquire Wolfspeed’s core assets, they could rapidly close the technology gap with leading groups and solidify their dominance in the global SiC market.”

Natixis: "If the U.S.-China trade war reignites, 9 million jobs could disappear in China."
Companies that have built supply chains in China are also expected to exit.
There is also a risk of the U.S. strengthening sanctions on China in advanced technology sectors.

If the U.S.-China trade war resumes, analysts warn that China could bear significant losses. The longer the trade conflict between the two countries lasts, the greater the blow it will deal to China’s industries in areas like employment, investment, and technological advancement.

U.S.-China Trade Tensions Threaten Chinese Jobs

On May 27 (local time), The New York Times cited analysis from French investment bank Natixis, reporting that if U.S. tariffs remain at around 30%, China’s exports to the U.S. could fall by half, potentially resulting in the loss of up to 6 million manufacturing jobs in China. If tariff negotiations fully collapse and a full-scale trade war resumes, job losses could rise to as many as 9 million. Earlier this month, the U.S. and China held high-level talks in Geneva and agreed to temporarily reduce tariffs by 1.15 percentage points for 90 days.

These warnings come amid growing concerns about China’s already fragile job market under a second Trump administration. Alicia Garcia-Herrero, Chief Economist for Asia-Pacific at Natixis, said, “The situation has definitely worsened compared to Trump’s first term,” adding that job preservation in manufacturing has become more crucial as employment in other sectors declines. According to China’s National Bureau of Statistics, the urban youth unemployment rate for non-students aged 16–24 reached 15.8% as of last month. After youth unemployment reached a record 21.3% in June 2023, China ceased publishing this data and now reports a modified figure that excludes middle school, high school, and college students. Even currently employed workers face instability. Since the trade war began and tariffs increased, many firms have been laying off workers to reduce costs. A 33-year-old office worker named Hu in Shanghai told the NYT  that she was laid off after China imposed a 125% tariff on U.S. construction equipment, blocking imports and causing her company’s revenue to drop by 40%.

Global Firms Accelerate ‘China Exit’

Prolonged trade tensions are expected to impact not only employment but the entire Chinese industrial landscape. Billionaire investor Bill Ackman, often dubbed the “Baby Buffett” on Wall Street, posted on X (formerly Twitter) last month that some believe China could outlast the U.S. in a trade war due to its long-term outlook. However, he warned that if tariffs persist, companies with supply chains in China are likely to relocate to India, Vietnam, Mexico, the U.S., or elsewhere.

Ackman emphasized that China must understand these dynamics and reach a trade agreement swiftly. Without assurances of steady, cost-effective supplies, he said, companies will leave China. He argued that the only reason both countries haven’t cut tariffs yet is fear of appearing weak, insisting that reducing tariffs is not a sign of weakness, and urging both sides to lower them to more reasonable levels, around 10–20%. Ackman concluded that if China continues to resist negotiations out of pride or emotional reasons, it could face far more serious and lasting economic damage. “Time is on America’s side, and an enemy to China,” he wrote.

U.S. Blocks China’s Push for Tech Independence

Another concern is the U.S. potentially strengthening sanctions on China’s high-tech sector if the trade war continues. Since the trade dispute began, Washington has gradually increased its restrictions on Chinese tech firms. In March, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) added over 50 Chinese entities related to quantum computing to its “Entity List.”

Being added to this list restricts companies from accessing U.S. technology and products, including advanced semiconductors. Among those newly listed were six subsidiaries of Inspur, China’s largest server manufacturer. Inspur was already sanctioned in August 2023, but this round added five subsidiaries in mainland China and one with an office in Taiwan. Also listed were two affiliates of Suma Electronics, which is associated with the Beijing Academy of Artificial Intelligence, backed by China’s Ministry of Science and Technology.

The Commerce Department stated these entities were listed because they engaged in activities contrary to U.S. national security and foreign policy interests. They were allegedly involved in the development of advanced AI, supercomputing, and high-performance semiconductors with military applications. The move also aims to further limit China’s access to exascale computing and quantum technologies, which are vital for processing massive volumes of data.

Governor Ueda expressed his intention to raise interest rates.
A 1.0% rate is expected around year-end to early next year.
Declining trust in the government bond market is a variable.

As the Governor of the Bank of Japan signals a potential interest rate hike, expectations of the first tightening cycle in 30 years are sweeping through the Japanese financial markets. Japan, which has long been trapped in deflation and low growth, is now attempting to normalize interest rates on the back of rising prices and currency changes. However, multiple variables—such as declining demand for long-term government bonds and tariff shocks originating from the U.S.—remain a burden. This cycle, where trust with the market will be crucial, is expected to test the policy competence of Japan’s financial authorities.

Rising Expectations for ‘Policy Normalization Conditions’

According to local media including the Nihon Keizai Shimbun (Nikkei) on May 28, Bank of Japan Governor Kazuo Ueda attended an event hosted in Tokyo where domestic and international economists and central bank officials gathered. There, he stated, “Consumer prices in Japan are once again rising due to increases in food prices such as rice,” adding, “We are closely watching how the underlying inflation rate will affect the overall economy.” He continued, “Assuming our economic growth and inflation forecasts are realized, we will adjust by raising the policy interest rate.”

Domestically, Governor Ueda’s remarks are being seen as a symbolic turning point. Japan’s prolonged stagnation and deflation since the 1990s have shackled the economy, and negative interest rates and quantitative easing have functioned as near-defeatist measures. However, with inflation recently reaching its highest level in 30 years, hopes are growing that Japan finally has the conditions necessary to begin policy normalization. In particular, interest rate normalization is considered a significant turning point not only for the capital and foreign exchange markets but also for encouraging the repatriation of Japanese capital that had previously flowed overseas.

Still, Governor Ueda remained cautious about the specific timing and magnitude of the rate hikes. He said, “We expect the underlying inflation rate to gradually converge to 2% toward the end of the forecast period,” but also noted, “Given the heightened uncertainty from U.S. tariff policies and other factors, we plan to proceed cautiously in judging policy and adjusting the level of monetary easing.”

Signals for Rate Hikes Continue Despite Recession Fears

The Bank of Japan ended its negative interest rate policy with a rate hike in March of last year, the first in 17 years, and raised rates again in July, marking a departure from its long-standing ultra-loose monetary policy. In January this year, it raised the rate to 0.5% and has maintained that level since. This gradual hike approach is based on a clear scenario. Financial markets and government officials in Japan are already sharing the expectation that “rates will rise to 1.0% by the end of this year or early next year,” and they are beginning to implement a scenario of small rate hikes every six months.

However, there are still uncertainties. Recent U.S. tariff policies are shaking the export outlook across Asia, and Japan, being highly export-dependent, is unlikely to avoid direct impacts. Sectors like automobiles, semiconductors, and machinery are showing signs of being affected by U.S.-led tariffs, which could lead to a slowdown in Japan’s growth. For the Bank of Japan to continue utilizing interest rate hikes as a policy tool, strong support from real economic indicators is essential.

In this context, the Bank of Japan’s recent decision to hold the benchmark rate steady while expressing confidence in achieving its inflation target is particularly noteworthy. The message it wants to send to the market is clear: “Unless growth slows significantly, we will maintain our tightening stance.” In Japan, this has been described as a policy that “seems realistic, but is actually quite ambitious,” with some expressing concern that the “policy clock is fixed firmly on normalization.” For this normalization-focused stance to continue, Japan will also need a favorable global trade environment.

Long-Term Bond Market Sends Warning Signs

Another variable is the poor performance of the long-term government bond market. A recent auction for 20-year government bonds recorded the lowest bid-to-cover ratio ever, essentially resulting in a “failed auction.” This highlights the growing distrust in long-term interest rates and suggests a widening gap between the central bank’s rate policies and what the market perceives. Normally, long-term rates would rise alongside policy rate hikes, but if demand falls and rates spike too sharply, this could undermine fiscal stability and market confidence.

Analysts say the decline in demand is largely due to major Japanese institutions—such as insurance companies and pension funds—adjusting their portfolios, thereby reducing demand for long-term bonds. This goes beyond supply and demand issues and signals a shift in risk appetite in Japan’s financial markets. If long-term bond demand does not support the Bank of Japan’s gradual hikes, long-term rates could rise faster than intended or become more volatile. This could, in turn, lead to a chain reaction: higher funding costs, greater public debt burdens, and reduced private investment.

This situation highlights the importance of effective communication with the market when adjusting interest rates. Governor Ueda’s insistence on avoiding premature conclusions reflects a deliberate approach—one that aims to implement policy at a pace the market can absorb, not merely respond to surface-level indicators. Japanese economists define the central bank’s cautious approach as “managing a psychological turning point.”

Germany Considers Lifting Restrictions on Long-Range Missiles for Ukraine
U.S.: Trump “Exploring Alternative Ways to Pressure Putin”
Russia Sustained Growth Through Defense Spending, But Is Now Hitting a Wall

Major European countries and the United States are intensifying their military and economic pressure on Russia. Nations, including Germany, are expanding weapons support for Ukraine while also raising the level of sanctions against Russia. Meanwhile, U.S. President Donald Trump has effectively withdrawn from mediating an end to the war and is now reportedly considering additional sanctions.

Against this backdrop, Russia, which had previously fueled economic growth by massively increasing defense spending and benefiting from wartime demand, is now facing a loss of momentum. Analysts note that population decline, the outflow of skilled talent, and a military-centered Keynesian economic policy have reached their limits, signaling that Russia’s war-driven economy is running out of steam.

Germany: “Ukraine Must Strike Russian Territory in Self-Defense”

On the 26th of May (local time), Politico and other outlets reported that German Chancellor Friedrich Merz, speaking at the Europa Forum in Berlin, said, “The weapons supplied to Ukraine by the UK, France, Germany, and the U.S. are no longer subject to range restrictions.” He added, “A country that can only respond to attacks from within its own borders cannot defend itself sufficiently. Ukraine must now be able to strike Russian military facilities to defend itself.” This is being interpreted as effectively opening the door for Ukraine to target Russian military assets within Russian territory directly.

Ukrainian President Volodymyr Zelensky has been requesting Germany to supply Taurus long-range missiles for the past three years. Former Chancellor Olaf Scholz rejected the request, fearing it would provoke Russia. However, Merz has previously stated he would be open to supplying them in coordination with allies. While Merz maintained "strategic ambiguity" and did not confirm specific arms support during the forum, he later stated during a visit to Finland that “range restrictions were discussed months ago,” implying that the delivery of Taurus missiles remains a possibility.

German domestic media and politicians are interpreting Merz’s remarks as a pivotal moment for Taurus missile support. Thomas Röwekamp, Chair of the Bundestag Defense Committee, told the Frankfurter Allgemeine Zeitung (FAZ) that “Ukraine was previously denied the Taurus due to its ability to hit deep inside Russian territory, but now that restriction is gone. This could be a decisive turning point.”

Russia Intensifies Offensive Amid Waning U.S. Mediation Efforts

Meanwhile, President Donald Trump is reportedly considering new sanctions against Russia. The Wall Street Journal (WSJ) reported that Trump is weighing additional punitive measures this week and may abandon mediation efforts altogether if pressure proves ineffective.

Citing multiple sources, WSJ said the proposed sanctions may not target the banking sector, but that several alternative ways to pressure Russian President Vladimir Putin are under discussion. The report also noted that Trump is growing frustrated with the ceasefire talks, and if his final attempts at pressuring Putin fail, he may fully withdraw from the negotiation process.

According to WSJ, Trump’s inner circle, including Senator Lindsey Graham, has urged him to stop viewing Putin as a negotiation partner and instead apply maximum pressure. Trump reportedly echoed this stance by recently stating that “Putin has gone completely mad,” signaling he is seriously considering tougher sanctions.

As Trump appears to retreat from diplomatic mediation, Russia has escalated its offensive in Ukraine. Experts say Russia perceives Washington’s diplomatic withdrawal and Ukraine’s dwindling weapons stockpile as an opportunity. The New York Times reported that since taking office, Trump has not approved a single new military aid package for Ukraine, nor has he clarified his position on how to utilize the USD 3.85 billion in support funds approved by Congress.

Russia’s War-Driven Economy Now Reaches Its Limits

Despite these developments, Russia has not shown an immediate reaction to Western sanctions, largely because its economy has remained unexpectedly strong. Last year, Russia’s GDP grew by nearly 4.1%, and unemployment stood at just 2.4%. Wages have increased, consumer spending has surged, and the economy appears overheated rather than strained. In March 2025 alone, the Russian RTSI stock index rose 15%, and over three months, it jumped 39%. On March 13, when news broke of potential peace talks in Riyadh, the index surged 10% in a single day.

Analysts attribute this resilience to military Keynesianism—a policy model where governments stimulate economic growth through public spending, especially on defense. A historical precedent often cited is Nazi Germany, which grew its economy by 55% from 1933 to 1937 through massive rearmament programs. In Russia’s case, enormous military expenditures have kept defense firms operating 24/7 in three shifts, while weapons factories facing labor shortages have driven up wages across the board.

However, experts warn that this war-fueled growth model has reached its limits. Keynesian policies require sufficient resources and reserves, which Russia is now exhausting. The most critical shortage is human capital. Even before the war, Russia faced natural population decline and relied heavily on immigration to fill labor gaps. Since the war began, there has been a mass exodus, particularly of high-skilled professionals in IT and finance, with an estimated 750,000 people fleeing the country. In addition, 10,000 to 30,000 young men are being conscripted each month, further straining the labor force.

Experts concur that “growth driven by war has its limits.” While short-term expansion may be achieved through increased defense spending, this does little to build sustainable economic strength. Investment in key areas like education, science and technology, and healthcare—which contribute to future productivity—has dramatically declined in Russia. Resources have instead been funneled into tank production, weapons manufacturing, and troop mobilization, all of which offer low productivity returns. Combined with brain drain and demographic decline, analysts say Russia has veered far off course from sustainable growth.